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My covered calls on Thornburg Mortgage and Gigamedia have good well into the money. To maintain my positions in the stocks I have bought calls on these stocks.

For Thornburg I think the stock should have a significant rise in the next couple of weeks. I have previously sold the Sept $12.50 call. Last week I purchased 2 October $12.50 calls. I have sold one for a profit and the other will replace the stock if it is called away next week.

For Gigamedia I sold the Oct $15 call when it was trading in the $13 range. It is now above the strike price so I bought the Oct $12.50 call. The $15 call has a significantly higher time premium, so I lock in a $.50 profit and keep the stock if it closes above the $15 strike.

For those of you who have visited my other blog, you know I am expanding my focus away from a lot of covered call writing & writing. I plan to use call writing as a part of my over all investment strategy, but not an exclusive strategy.

I will continue to use this blog to post any trades I make concerning stock options.

I have owned a stock position in Silver Wheaton for several months and have sold several calls against the position. Yesterday, to generate some income, I sold the Sept $12.50 call for a $.30 premium. The stock closed today at $11.13, unchanged.

If you have been following the hot stock stories this week, or visiting my other blog, you know Thornburg Mortgage TMA has been on a roller coaster. From being a $26 stock two weeks ago it dropped to as low as $7.50 earlier this week.

I am a long time holder of TMA in another account, but as the stock started falling I started buying. My purchase prices ranged from $22 down to $10.50, leaving me with an average cost of about $17. Today I sold the Oct $17.50 call for $1.10. If the stock is called away that will be a 24% return from today’s price.

I do not think this is a trade for the conservative covered call investor. I, however, have a strong belief that this company with thrive in the upcoming mortgage market so I am comfortable with this trade.

After yesterday I thought my Aug $12.50 call on Gigamedia GIGM would expire out of the money. Today with the market up, it is trading just at to slightly in the money.

My plan with GIGM is to hold the stock for the longer term (see my post at Seeking Alpha) so I did not want it called away. I bought back the call and sold the Oct $15 call for a net credit of $.45. I am trying to manage this position to make some income selling calls while continue holding the stock for growth. We will see how the plan works.

On July 31 I bought back the Aug $12.50 call I had sold on my position in Silver Wheaton SLW and sold a Sept $15 call. Today I bought the Sept call back for a dime plus commission.

The whole sell/buy/sell/buy ended up costing me $67.50 net loss on the options. The stock ran up to almost $15 in July and I did not want to have it called away. In fact it looks like my original sold call will finish out of the money.

I still own SLW and think the stock will do great over the next year. My lesson learned is it is probably better to let a stock be called away, then buy some back when the seemingly inevitable price pull back comes.